If people (who used to neither borrow nor save)are now borrowing to put their kids through college then this will cause the
A)supply for loanable funds to increase.
B)demand for loanable funds to increase.
C)supply for loanable funds to decrease.
D)demand for loanable funds to decrease.

Question

Quizplus · Accepted Answer

When people who previously did not borrow or save start borrowing, it increases the demand for loanable funds. This is because they are now competing with other borrowers (such as businesses and homeowners) for the same pool of funds. As a result, interest rates may increase to attract lenders to supply more funds, leading to an increase in the quantity of loanable funds supplied in the long run.

If People (Who Used to Neither Borrow nor Save)are Now